New look for new Slug & Lettuce

Slug & Lettuce is preparing to unveil a new look for the future.

Next month sees the unveiling of the future of Slug & Lettuce. After a somewhat troubled start to the year, the group has been undergoing a "strategic review" which will see the concept tweaked and retuned.

Two new sites are opening — one in Borough in central London and another in Bath in Somerset, which are expected to reveal developments in menus, decor and customer service.

It also reflects how the London-based company has moved on from its southern roots to have half of its estate outside of the capital, expanding as far North as Glasgow.

But, according to managing director Sheila McKenzie, one of Slug & Lettuce's strengths is that it hasn't stood still but has regularly moved on.

"Everyone can think of examples of neglected brands — they're likely to die," she said. "The Slug & Lettuce brand is alive and well."

Although Slug & Lettuce is one of the longest-serving examples of branding in the industry, it has been involved in many changes over the years.

The company itself began as Cromwell Taverns, later becoming Grosvenor Inns. When it floated on the Stock Exchange in 1992, it was focused on running traditional pubs in London and the Midlands, but that was about to change.

It used funds from flotation to buy a small bundle of pubs known as Slug & Lettuce from entrepreneur Hugh Corbett, who launched the name in 1984.

Grosvenor wanted to re-invent the brand and brought in Sheila McKenzie, who had developed the successful Pitcher & Piano chain of modern pubs.

She created a stylish, airy look with light-coloured woods, fireplaces and sofas, aiming it a younger professional crowd. In line with the trend in the pub sector, it is female-friendly with great emphasis on customer service. It was also part of the trend for introducing quality wine and food into pubs.

At the same time, Grosvenor was building up a portfolio of brands, such as Bar Central, Belcher's and Hedgehog & Hogshead, but two years ago it began to focus solely on developing one brand.

It sold 20 outlets to the newly formed Ambishus Pub Company and in May last year rechristened itself Slug & Lettuce Group.

Even before deciding to focus, the 16 Slug & Lettuces were not confined to Greater London, with the brand already established in Birmingham and Cirencester in Gloucestershire.

Over the past two years it has doubled the size of the brand's estate, with Borough and Bath due to take it up to 32 by the end of next month.

It looks like Grosvenor's brave decision to invest in just one brand has paid off. In the first 12 months it increased turnover by 16 per cent to £26.3m, driving pre-tax profits up by 158 per cent to £1.96m.

However, this was undermined by a setback from the empire's expansion into the North. In the six months to November 1998, five sites in Leeds, Nottingham, Manchester, York and Harrogate in North Yorkshire together recorded an aggregate loss of £140,000.

It was blamed on the difficulty of taking a southern brand into a region where it was largely unknown on top of some local problems.

"Research we carried out had shown that our brand suffered from a lack of awareness and in some locations not being in the right place," McKenzie said.

The company immediately sprung into action, stepping up its marketing, public relations and promotions to make sure the name was recognised north of the Midlands.

In Manchester it gained a late licence to bring it into line with others bars in the area. In York and Harrogate it persuaded magistrates to release the pubs from conditions which banned it from placing tables and chairs outside during the day.

In the six months to May this year, the batch of five made a profit of £73,000 and the company says further progress is being made.

The group as a whole has enjoyed record sales at some of its bars, but its experience in the North forced it to rethink some of its plans.

It withdrew from a number of sites and halted its opening programme, reducing the number for the year from nine to six.

"We would rather have fewer units with higher sales than many units trading at well below our average sales level per unit of almost £900,000 a year," McKenzie said.

The first Scottish Slug & Lettuce opened a year ago in Glasgow and, according to research, it has been better received than in the North, with further sites planned.

Other openings in the past 18 months also took it to Bristol, Winchester in Hampshire, Bournemouth in Dorset and two more in London, including one next to its West End headquarters. Chairman Tim Thwaites announced in August that the brand was undergoing a "strategic review" which would cover decor, food and customer service.

Food sales have already been growing and this year the group introduced new "short" menus, featuring snacks, brunch and cakes, for use with the main menu and daily specials.

It has also been investing in training, with most of its 600 staff taught on site by its own trainers, and has upgraded its management development scheme.

This helps to retain staff, allowing trainees to become managers or even gain promotion to head office.

However, this year also saw the departure of chief executive Gary Pettet, who founded the company more than 12 years ago. He said it was time to move on having "achieved the majority of my objectives within the company".

He is working on new projects as well as devoting more time to other business interests, such as his chairmanship of Po Na Na, the growing late-night bar group.

It led to City speculation about the future of the business, with rumours of independent operators such as Regent Inns considering a takeover bid.

The board has echoed others in the sector by complaining of the "small company effect" which has seen institutions shy away from investing in Slug & Lettuce in favour of the FTSE 250.

Nothing has come of the speculation but Thwaites admitted his management was considering its "strategic options".

Thwaites has retired as non-executive chairman, to be replaced by David Williams, president of Diageo's Burger King operations in Europe, the Middle East and Africa and formerly commercial director of Whitbread's managed pubs.

With McKenzie at the helm, the company is pressing ahead with rolling out the refined, updated version of its winning formula.

"We have the best people running our business and we have some excellent sites," she said. "Our business is in good shape for the future."